Carney’s Guidance

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Setting interest rates is hardly an exact science. and the unexpectedly strong pace of economic recovery has landed the Bank of England with an acute dilemma on how to go about it. Interest rates have been at almost zero for the past five years. Mark Carney, the Governor, has said that the Bank would not consider raising them till unemployment fell below 7 per cent.

That level is now very close. Alongside other indicators of recovery, the unemployment rate has fallen sharply. This is prompting expectations (which the Bank is keen to play down) of an early rise in rates.